1. Field of the Invention
The subject invention is directed to retail packaging, and more particularly, to a retail package for selling prepaid debit cards and to methods for distributing and loading funds onto prepaid debit cards.
2. Background of the Related Art
Over the past ten years, consumers in the United States have seen the emergence of a new electronic transaction medium in the form of stored value cards or gift cards. Each month, hundreds of millions of dollars worth of transactions are generated at various retailer points of sale around the United States using these cards. During the most recent holiday shopping season, it is estimated that $17 Billion dollars or 8% of the entire holiday season expenditure was in the stored value category.
Approximately five years ago, the Bankcard Association (Visa and MasterCard) began to consider retail sales of branded bankcard products that could be sold at retail locations in connection with a simple J-hook package. The initial thoughts behind these products were to provide a more powerful type of universal gift card. These pre-denominated cards would be activated at the point of sale in amounts of $25/$50/$100 or more across a merchant's existing point of sale, and would carry a convenience fee surcharge for purchase.
The passage of the Patriotic Act and its associated compliance rules with respect to demographic data of cardholders effectively scuttled most of these programs, even though there were active beta tests being run around the country in many retail chains. Over the last two years, third party processors have fine-tuned their card issuance systems to become compliant with government standards as they relate to the capture of demographic data from perspective cardholders. Consequently, there are now numerous combinations of retail merchandising capabilities that can lead to the final issuance of an embossed, personalized, branded bankcard to a consumer.
There are many reasons why people would want to purchase such a product. For example, they might not have access to a conventional bank issued credit card, so they are effectively shut out from point of sale purchases, ATM devices, and on-line or over-the-phone purchases. Alternatively, a family that has a child away at college could use stored value cards to transfer money quickly and easily to the child. Such conveniences, coupled with real-time reporting capabilities provide a comfort level for both the sender and recipient. Whatever the reason, the instant issue bankcard product would well serve a retailer's customer base and build repeat traffic, enhance loyalty propositions, and create exciting manufacturer promotions.
One of the more popular incarnations of this product is the single pack STAR branded debit card. These single cards are usually sandwiched in a paper card stock package together with the issuer's terms and conditions sheet. The typical retail price for these products is $6.95-$9.95. A retail “Reload” is usually in the $3.50-$4.95 price range. These cards usually have limited capabilities. For example, they are useful for withdrawing funds at a STAR enabled ATM device, and if coupled with another card linked to the same card, can be used for limited money transfers. Depending on the processor's capabilities, a user identification number or PIN may be issued in a separate mailing or it can be created and delivered in a different manner. A limit of funding on these cards usually ranges from $500-$1,000. An option that is available to many perspective cardholders is the Bankcard upgrade. Once a perspective card purchaser goes through the Patriot Act compliance process via the Internet or a customer service phone operation, the card can be “upgraded” to a stored value embossed personalized Bankcard product, which gets forwarded to the cardholder in the mail.
On Jul. 17, 2002, the Department of the Treasury and seven federal financial institution regulators issued proposed rules pertaining to Section 326 of the USA Patriot Act. The Act includes provisions for fighting international money laundering and blocking terrorist access to the U.S. financial system. Section 326 of the Act addresses the creation of minimum requirements for verification of customer identification in the new account opening process. These rules are directed at financial institutions, which are defined as banks, insurance companies, mutual funds, credit card companies, money service businesses, broker dealers, futures commission merchants and casinos. Final rules were issued on May 9, 2003, which required financial institutions to be in compliance therewith by Oct. 1, 2003.
The Patriot Act compliance usually consists of the perspective cardholder supplying their name, address, home phone number, date of birth, and social security number. This information is linked to various databases through third parties and is checked against a list of terrorist and money launderers. For people that do not possess a US issued social security number, there are various forms of government issued means of identity that are acceptable. For debit card-based programs, the program owner and its banking partners open an account with a banking institution on behalf of the individual participants. This is required to safely and securely fund the cards and allow for seamless transaction activity whether ATM based or at point of sale. To be in compliance with the Act, financial institutions are required to keep an identifying record of the individual prior to opening an account.
Another product that is currently available is the dual card package, which has an ATM debit card or proxy card, as well as a second ATM debit card that has links to Cirrus and Maestro, printed on the reverse side. This second card requires Patriot Act compliance before it is activated, and again, the perspective cardholder can upgrade to a personalized Bankcard product.
In the first quarter of 2004, Visa announced new Visa Flag product options. Citing that debit volume at the point of sale was increasing globally at twice the rate of credit volumes, Visa decided to leverage the existing Electron product to create a new revenue vehicle for its issuing members in the United States. Previously the Electron product was only available overseas.
It is envisioned that this Instant Issue Visa Electronic card can take a variety of different forms at retail. For example, the retail package may have a pair of Visa Electronic cards plus a Debit card in the same package, or the retail package can have one Debit card with one Visa Electronic card. It is also envisioned that a single Visa Electronic card could be provided in a retail package, which would require OFAC (Office of Foreign Affairs and Currency) and Patriot Act compliance before utilization. All of these multiple card packages would be linked within a processing system so that money transfers could occur between the cards of registered users for real time, high speed transfer and funds availability world wide.
Seen as an entry level prepaid debit card product, the Electron product was viewed as a product that could leverage the Visa mark with low risk through enhanced issuer controls. The issuance of these Instant Issue cards will be limited to countries that have at least 95% of transactions processed at On-line capable terminals. One of the most interesting features of these Electron cards was the fact that that there is no embossed card numbers and no cardholder name in the package. The card will bear the familiar Dove hologram, must have an “Electronic Use Only” legend on the face of the card and must have an expiration date within three years of issuance. When the card is re-issued, it must comply with all personalization requirements for unembossed Visa Cards.
This electronic product is good for point of sale purchases and if coupled with Plus and Interlink useful at almost 1 million ATM devices worldwide. The estimated number of online Visa acceptance locations worldwide where this card may be utilized is almost 12 million.
These instant issue products, coupled with the right processor will open up a whole new world to cardholders. Seamless money transfer, real time reporting, and the availability of value added pre-paid products such as cellular phone minutes, long distance payphone calling, and others will only enhance the card holder experience and drive increased revenues for merchants, issuers and acquirers in the coming years.
It would be beneficial to provide a new and improved retail package for selling or otherwise distributing prepaid debit cards, including a proxy card adapted to be loaded with funds at a point of sale, and at least one debit card requiring registration prior to use, wherein the proxy card and the at least one debit card are linked within a processing system to facilitate fund transfers therebetween.